Auto Loan Debt

Today, America is nearly 70 trillion dollars in debt, and that debt is shooting higher at an exponential rate. Usually most of the focus in on the national debt, which is now 21 trillion dollars and rising, but when you total all forms of debt in our society together it comes to a grand total just short of 70 trillion dollars. Many people seem to believe that the debt imbalances that existed prior to the great financial crisis of 2008 have been solved, but that is not the case at all. We are living in the terminal phase of the greatest debt bubble in history, and with each passing day that mountain of debt just keeps on getting bigger and bigger. It simply is not mathematically possible for debt to keep on growing at a pace that is many times greater than GDP growth, and at some point this absurd bubble will come to an abrupt end. So those that are forecasting many years of prosperity to come are simply being delusional. Our current standard of living is very heavily fueled by debt, and at some point we are going to hit a wall.

Let’s talk about consumer debt first. Excluding mortgage debt, consumer debt is projected to hit the 4 trillion dollar mark by the end of the year…

Americans are in a borrowing mood, and their total tab for consumer debt could reach a record $4 trillion by the end of 2018.

That’s according to LendingTree, a loan comparison website, which analyzed data from the Federal Reserve on nonmortgage debts including credit cards, and auto, personal and student loans.

Americans owe more than 26 percent of their annual income to this debt. That’s up from 22 percent in 2010. It’s also higher than debt levels during the mid-2000s when credit availability soared.

We have never seen this level of consumer debt before in all of U.S. history. Just a few days ago I wrote about how tens of millions of Americans are living on the edge financially, and this is yet more evidence to back up that claim.

Right now, Americans owe more than a trillion dollars on auto loans, and we are clearly in the greatest auto loan debt bubble that we have ever seen.

In the first quarter, the delinquency rate on credit-card loan balances at commercial banks other than the largest 100 – so at the 4,788 smaller banks in the US – spiked in to 5.9%. This exceeds the peak during the Financial Crisis. The credit-card charge-off rate at these banks spiked to 8%. This is approaching the peak during the Financial Crisis.

The student loan debt bubble has also surpassed a trillion dollars, and the average young adult with student loan debt has a negative net worth…

Despite economic and stock market gains over the past nine years, many young adults are still struggling to get ahead in their financial lives and, in some ways, things may have actually gotten worse.

Americans age 25 to 34 with college degrees and student debt have a median net wealth of negative $1,900, according to a report analyzing 2016 Federal Reserve data released Thursday by Young Invincibles, a young adult advocacy group. That’s a drop of $9,000 from 2013, YI’s analysis found.

Meanwhile, corporate debt has doubled since the last financial crisis. Thousands of companies are so highly leveraged that even a slight economic downturn could completely wipe them out.

State and local government debt levels are also at record highs, but nobody seems to care. And if we never have another recession everything might work out okay.

The biggest offender of all, of course, is the United States federal government. We have been adding about a trillion dollars a year to the national debt since Barack Obama first entered the White House, and Goldman Sachs is projecting that number will surpass 2 trillion dollars by 2028…

The fiscal outlook for the United States “is not good,” according to Goldman Sachs, and could pose a threat to the country’s economic security during the next recession.

According to forecasts from the bank’s chief economist, the federal deficit will increase from $825 billion (or 4.1 percent of gross domestic product) to $1.25 trillion (5.5 percent of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7 percent of GDP).

Our national debt has been growing at an exponential rate for decades, and because total disaster has not struck yet many people seem to believe that we can keep on doing this.

But the truth is that it simply is not possible. There is only so much debt that a society can take on before the entire system implodes.

So how close are we to that point?

The following chart comes from Charles Hugh Smith, and it shows the exponential rise in overall debt levels that has taken us to the brink of nearly 70 trillion dollars in debt…

And this next chart from the SRSrocco Report shows how our rate of overall debt growth has compared to our rate of GDP growth…

We are literally on a path to national suicide.

Whether it happens next month, next year or five years from now, it is inevitable that we are going to slam into a brick wall of financial reality.

For the moment, the only way that we can continue to enjoy our current debt-fueled standard of living is to continue increasing our debt bubble at an exponential rate.

But that can only go on for so long, and when the party ends we are going to experience the greatest debt crisis in history.

Today, the average American household is nearly $140,000 in debt, and that is more than double median household income. And if we were to include each household’s share of corporate debt, local government debt, state government debt and federal government debt, that number would be many times higher.

All of this debt will never be repaid. Ultimately there will come a day when the system will completely collapse under the weight of so much debt, and most Americans are completely unaware that such a day of reckoning is rapidly approaching.

How long can our debt levels keep growing much, much faster than the overall economy? We haven’t had a year of 3 percent growth for the U.S. economy since the middle of the Bush administration, but we keep borrowing money as if there is no tomorrow. Much of the focus has been on the exploding debt of the federal government, and that is definitely something I plan to address once I get to Washington. But on an individual level, U.S. consumers have been extremely irresponsible as well. In fact, one new survey has found that more than 80 percent of all American adults are currently in debt…

It’s no secret that America is a nation that runs on debt, but it may surprise you to learn that the overwhelming majority of U.S. adults owe money in some way, shape, or form. According to new data from Comet, here’s how many Americans have debt at present:

80.9% of Baby Boomers

79.9% of Gen Xers

81.5% of Millennials

For most of us, it starts very early. We were told that going into debt to get a college education would not be a problem because we would be able to pay those loans off with the good jobs we would get after graduation.

Unfortunately, those good jobs never really materialized for many of us, and now millions of former college students are absolutely drowning in debt…

A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt.

As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt.

In addition to owing more than a trillion dollars on student loans, Americans are also now carrying more than a trillion dollars of auto loan debt and more than a trillion dollars of credit card debt.

Corporations have been incredibly irresponsible as well. Corporate debt has doubled since the last financial crisis, and corporate bankruptcies have been rising steadily in recent years. All it would take for the dominoes to really start falling is some sort of a major economic downturn.

Local, state and federal government debt levels are all at record highs as well. It is now being projected that our national debt will hit 30 trillion dollars by 2028, and those projections are probably too optimistic.

My guess is that we will almost certainly hit the 30 trillion dollar mark far sooner than that.

We can’t keep doing this to ourselves. Our incessant greed is literally destroying the future, but anyone that tries to warn about the collective insanity that has descended upon our society is mocked and ridiculed.

Let me ask you a question.

Would you willingly choose to give yourself cancer?

Of course not, but that is essentially what we are doing to ourselves as a society.

Debt is economic cancer, and as Lance Roberts has pointed out, if we continue to allow debt levels to grow like this eventually it will kill our entire economy…

Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host.

Debt is addictive, because it does boost our standard of living in the short-term. It is so easy to keep going back for one more “hit”, but every time we do it just makes our long-term crisis even worse.

Most people out there seem to think that our economic problems have been “solved”, but that is not true at all.

The truth is that our long-term problems just continue to grow with each passing day, and that is one of the reasons why I am so determined to go to Washington. We are at such a critical juncture right now, and if something is not done the prognosis is extremely negative.

If we stay on this current path, the very best that we can hope for is a “soft landing” and a greatly reduced standard of living for future generations of Americans. Here is more from Lance Roberts…

The processes that fueled the economic growth over the last 30 years are now beginning to run in reverse, and when combined with the demographic shifts in the U.S., the impact could be far more immediate and prolonged than the media, economists, and analysts are currently expecting. Sacrifices will have to be made, the economy will drag on at subpar rates of growth, individuals will be working far longer into their retirement years and the next generation of Americans will lead a far different life than what the currently retiring generation enjoyed.

It is simply a function of the math.

I am sorry for not writing more lately. I have been working night and day to get ready for May 15th. With Donald Trump in the White House, this is our opportunity to take our government back. If we miss this window, we may never have this sort of opportunity ever again.

America is drowning in debt, but of course our problems go far beyond that. Our economic, political, cultural and spiritual problems go very deep, and we desperately need to change course as a nation.

Unfortunately, most of the population is in a deep state of sleep, and my hope is that we can wake them up while there is still time to turn things around.